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Will the Housing Market Change When Student Loans Are Forgiven? Here’s What Experts Say – GOBankingRates

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The American Dream of going to college, getting a good job, finding a great home to live in and raising a family seems to be becoming less of a reality as the days go by. Part of the reason, according to some experts, is the mounting student loan debt that many carry with high monthly payments that are as much as some mortgages.

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In the statement released by the White House last week outlining President Joe Biden’s objectives for providing new relief from student loan repayments, it was noted that there are currently 43 million people with this type of debt. 

Most carry balances of around $25,000, which has equated to more than $1.6 trillion for all U.S. borrowers combined. Given these figures it’s not surprising that home ownership seems unattainable to many after the Boomer generation — especially since the White House notes that the price of public or private 4-year education has tripled since 1980, making it even more difficult to afford a house in more recent decades.

A new poll from the National Association of Realtors backs this up. It was found that 60% of millennials reported student loan debt being one of the biggest obstacles to their ability to buy their first home. 

Jessica Lutz, vice president of demographics and behavioral insights at the National Association of Realtors told RISMedia (a real estate trade magazine) that having student loan debt becomes imperative because it prevents someone from saving funds for a down payment. Furthermore, she noted that the large debt-to-income ratio affects “the type and size of a home that they can purchase.”

A 2019 study in the Journal of Labor Economics, as noted by RISMedia, also found a strong relationship between the two – finding that every $1,000 tacked on to someone’s student loan debt led to 1-2% less likely probability for homeownership for those in their mid-20s.

Which begs the question: With Biden’s $10,000 student loan forgiveness on the horizon, will it impact the housing market and allow new homeowners a chance to enter the market? 

In a recent GOBankingRates poll, readers were asked what they’d spend their money on instead if their student loans were forgiven and a large majority said they’d buy a house. In fact, 22% noted that option, including 48.18% of 18- to 24-year-olds and 45.33% of 25- to 34-year-olds who are the most likely to become first-time homeowners. 

But before assuming that Biden’s new agenda to offer $10,000 in debt cancelation (to those making under $125,000 annually) will lead to a shopping …….

Source: https://www.gobankingrates.com/investing/real-estate/will-the-housing-market-change-when-student-loans-are-forgiven-heres-what-experts-say/

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